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U.S. Wastes over $1 Trillion a Year on Health Care Spending

MISINFORMING THE PUBLIC BY OMISSION:

U.S. Wastes over $1 Trillion a Year on Health Care Spending

Even worse, we're not getting any better quality of care for double the spending per person.

by Marc Cherbonnier

2 September 2009

Dozens of countries with better-rated health care systems would save us at least one $trillion a year every year, if we would just adopt one of their systems for ourselves. So why are we dithering?

The national health care debate in Washington and at Town Hall meetings around the country has been especially terrible because of the lack of focus on what the most important priorities of our future health care system should be. This isn't surprising, because our politicians and the media are dodging the most important issue, and the public doesn't know about it.

Do you know how much we spend per capita on health care in the U.S. when compared to our peers in other advanced countries? You should. Here are some examples:

The Japanese spend only 35% of what Americans pay ($2581 vs $7290). Those in the United Kingdom pay just 41% of what we pay. And the French, whose health care system is rated the best in the world, pay less than half of what we pay.

Now, you would think this excessive spending in the US would be a major issue, wouldn't you? But no, it's been hushed up. Why?

Given that US citizens aren't getting very good value for the huge amount they're spending, you would think cutting costs and improving quality would be an extremely important part of our public discussion. But strangely, it isn't. We're being diverted by divisive side issues.

How much money are we talking about here? Let's do some simple math. If we adopted the Japanese plan just as it is, the US savings per person per year would be $4709. Multiply that by our 300,000,000 citizens, and the savings amounts to $1,412,700,000,000 per year, every year. That's $1.4 trillion dollars. [Ref. Total spending on health care, per person, 2007]

If we adopted the United Kingdom's plan as-is, the savings would be $4298 per year per person, resulting in $1,289,400,000,000 savings per year, every year.

Dozens of countries with better-rated health care systems would save us at least one trillion a year every year, if we would just adopt one of their systems for ourselves. So why are we dithering? Think of the money we're wasting by dithering!

Sure, questions would need to be answered if we were to adopt another country's system, such as how much doctors and nurses would be paid, etc. We could tinker, and maybe spend a few billion more than our peers overall--but that would be a drop in the bucket compared to overall savings we can realize.

And who would get the savings if the US were to emulate one of its peer countries? Let's start with employers, who would benefit the most because they'd significantly reduce their costs for employee benefits. This would enable employers to give employees raises and/or reduce product costs and sell more products—thereby maybe hiring more US employees. Employees who now pay for all or part of their health care insurance coverage would pay less, so their net pay would be increased, and so the overall economy would benefit, too. The self-employed, who pay for 100% of their health insurance, would benefit handsomely, getting a effective annual raise of about $4,000 in disposable annual income ($8,000/yr. if they have family coverage). Retirees could avoid current co-pays and the cost of a Medicare Part B entirely.

We're paying more than twice as much as our peers in other countries and not even getting as good a level of health care quality. Regardless of political persuasion, we should all be steaming mad, and demanding parity.

Government, too, would benefit because its per-person spending for Medicare and Medicaid would likewise be reduced, perhaps by larger-insured-group negotiated price cuts and/or profit-margin-capping. This in turn would substantially reduce the system's projected unfunded liability for future years, thereby cutting back, and perhaps even reversing, the pace of deficit spending. Such government savings, in turn, could result in tax cuts, further stimulating the economy.

Here we are, paying more than twice as much as our peers in other countries and not even getting as good a level of health care quality for the money. Regardless of political persuasion, we should all be steaming mad, and demanding parity.

But unfortunately most of us don't realize this situation exists, because our media and politicians are allowing our attention to be diverted by more trivial, and more divisive, issues.

So—what's all that extra money we're spending going for? The usual pigs at the trough: for-profit insurance companies (who rake it in from malpractice premiums as well as from medical insurance policies), drug companies (who charge much more in the US than elsewhere for the same drugs), politicians, and the media (via all those ads).

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